The Ultimate Guide to Bitcoin™

Book Description

The Ultimate Guide to Bitcoin covers all aspects
of the Bitcoin phenomenon, explaining how virtual currency works,
how it differs from and compares to traditional currency, the
history of Bitcoin, how to purchase and pay with bitcoins, where
and how one can obtain and manage a Bitcoin wallet, how to become a
Bitcoin minor, and more. In addition, this book presents
information about competing virtual currencies, and compares them
to Bitcoin. Readers will also learn to judge the relative value and
safety of the Bitcoin currency, and determine whether the rewards
outweigh the risks.

Bitcoin is the virtual currency of the Internet, a distributed,
worldwide, decentralized digital money. It's the most popular of
several current cryptocurrencies, devised in 2009 by programmer
Satoshi Nakamoto.(Although that's probably not his real
name...)

The unit of currency in the Bitcoin system is called a
bitcoin, or BTC. A bitcoin is not a physical currency, such
as a dollar bill or nickel, but rather just a number associated
with a Bitcoin Address. Unlike traditional currencies, Bitcoin is
not issued from or managed by any central government bank or
organization. With Bitcoin, users become their own banks –
and assume all the risks inherent in that proposal. As such, the
value of a bitcoin is not pegged to any traditional real-world
currency. Over the currency's relatively short life, the dollar
value of a bitcoin has fluctuated from 14 cents (actually, zero at
inception) to more than $1,2000. (Today a bitcoin is worth
approximately 800 US dollars.)

Bitcoin exists on a peer-to-peer network, much like BitTorrent.
Users on the P2P network, called miners, enable their PCs to
be used to host and manage bitcoin transactions. To use Bitcoin, a
user must sign up with an online wallet service, through which all
transactions are managed. This digital wallet is typically stored
on the P2P servers, with all transactions secured via public-key
encryption. The public key is used to encode all payments, which
can then be retrieved only with the use of the user's private
key.

One can earn bitcoins by providing goods or services to other
users or by participating in the mining process. Users can also
purchase bitcoins with traditional currency from one of several
Bitcoin Exchanges. Bitcoins can then be spent on other goods and
services available over the Internet.